Sales of secondhand sports equipment score big for franchises

It would not seem much of a decision if you had a choice of buying a pair of gloves for your hockey-mad child for $30 or paying half that.

The $15 pair is used but in good condition, and can be purchased at Play It Again Sports, a franchised store that sells both new and used sports equipment.

But David Jose, co-owner of Play It Again Sports in Carle Place, who also recently opened franchise in East Northport, said only about 15 percent of his sales are from used, discounted equipment.

So much for conventional wisdom.

“We’ve seen the used equipment as great to get people in the store looking for a good deal, and some moms will say, ‘I want to buy my kids new stuff,’” Jose said.

But with the economy on the disabled list, the used section of the store is becoming more than just bait for bargain hunters who later change their minds. Jose said he’s seen the used goods begin to move at a quicker pace. In the fourth quarter of 2008, sales of used sports equipment at his stores grew more than 10 percent.

Like every other sector of the retail industry, sporting goods are taking a hit. Statistics from the National Sporting Goods Association reveal that sales of equipment and footwear have grown only 3 percent over the last couple of years and sports clothing has grown only 2 percent. Americans spent $53.3 million on sports stuff in 2008.

Consumers cut back more than three percent on purchases of bigger-ticket items, such as bicycles, boats and snowmobiles, according to the NSGA.

The availability of used products is affecting other markets besides sporting goods. Toyota has rolled out a new program to sell used hybrids when sales of the Prius slowed, and the world-famous watch retailer Torneau has put used watches in the showcase windows at its flagship Fifth Avenue store.

On eBay used iPhones and video games are among the hottest items.

Play It Again Sports, with 400 locations across the country, is franchised and branded by Minneapolis-based Winmark Corp., which also owns other new and used retailers. Plato’s Closet is a Winmark franchise that sells used, branded teenage clothing.

“Almost 99 percent of clothes sold at Plato’s Closet franchises are used,” said Steve Murphy, president of franchising for Winmark. Once Upon A Child, another Winmark franchise, sells children’s toys, clothes and furniture with used goods comprising 90 percent of the inventory. Music Go Round sells musical instruments, with 70 percent of its sales from used guitars, Murphy said.

“We’re seeing Play It Again Sports’ used sales trending toward 30 percent, given the economy,” Murphy said.

Jose, along with two partners, started out as employees of the Carle Place store in 2000 and six years later bought the franchise. In September they opened the East Northport franchise. The total cost was about $250,000, Jose said.

The cost of a typical franchise breaks down to a $20,000 franchise fee, $125,000 in opening inventory, $40,000 in working capital and the remainder on build out, Murphy said. There’s also a 5 percent royalty on weekly gross sales paid to the Minneapolis home office.

Business is good, Jose said, but could be better. “Go figure, we expanded at the beginning of the worst time in 20 years,” he said.

But some fast footwork and changed strategies kept the new business in the black, he added.

“We had projections of numbers we wanted to do, but getting closer to opening in East Northport we realized which way the economy was going,” Jose said.

Play It Again Sports cut inventory orders and intensified print advertising through the holidays which spurred sales.

A TV marketing campaign has been put on hold, however. “We’re hesitant to commit to anything.”

With the sound of bats striking horsehide and the thump of balls into leather gloves coming in just a few weeks, Jose and his business will be ready for spring.